The Ralph and Goldy Lewis Center for Regional Policy Studies

California and other state governments use funding formulas to apportion, or geographically distribute, billions of dollars of expenditures for government programs every year. Most previous research on funding formulas has not considered the geographic source of tax revenues, and therefore has not examined the geographic redistribution of funding. This study examines the pattern of geographic redistribution that results from the principal transportation funding formula governing the State Highway Account, and finds that 11 percent of California's highway funds were redistributed from the most densely populated counties to the less densely populated counties. The study concludes by questioning the continuing need for the densely populated counties in California to be subsidizing the financing of the sparsely populated counties. While there may be legitimate reasons for such redistribution, the degree of the redistribution may require reassessment.